Your PPP Loan Forgiveness Strategy Might Be to Play the Waiting Game. Here’s Why

If the complex PPP loan forgiveness process has been weighing over your head, here’s some good news: you don’t have to apply right away. In fact, a lot of small businesses aren’t.

The Small Business Administration and Treasury continue releasing guidelines. And, there’s plenty of time for Congress to release more COVID-19 legislation. So, it’s no surprise that many business owners are waiting for the dust to settle before filling out their application. What should your PPP loan forgiveness strategy be?

PPP loan forgiveness strategy: The waiting game

You might be eager to see how much—if any—of your loan you have to pay back. But before rushing through the application and turning it into your lender, weigh your options.

Here are some reasons why you might consider waiting to complete your PPP loan forgiveness application.

1. You can take advantage of the extended covered period

Originally, the Paycheck Protection Program covered period was eight weeks. That meant borrowers had eight weeks to make eligible payments with their loans.

But, the PPP Flexibility Act (which was signed into law on June 5, 2020) tripled the covered period’s time from eight weeks to 24 weeks. This means you have 24 weeks from your first PPP loan disbursement to use the loan for qualifying payroll costs and mortgage interest, rent, and utility payments.

So, why rush it?

If you received your loan prior to June 5, you can elect to use the original eight-week covered period. Or, you can take advantage of the extended covered period to make sure you’re using your PPP loan proceeds toward eligible expenses.

2. You have time to thoroughly prepare

There currently isn’t a hard PPP forgiveness application deadline. But, you might be worried that waiting to apply for PPP forgiveness means you may have to start repaying the loan.

However, the loan repayment deferral period says that you have until one of the following (whichever is earlier) to start paying back the loan:

The date the SBA remits loan forgiveness to the borrower 10 months after the end of the covered period (if the borrower doesn’t apply for forgiveness)

Unless the SBA and Treasury release a set application deadline, you have 10 months before you have to start repaying the loan. Likewise, this may mean you have 10 months after the end of your loan’s covered period to apply … which gives you ample time to prepare.

Use this time to gather all your documents and perfect your calculations. Taking your time can help prevent errors on the application and ensure you have all the supplemental documents ready to go.

3. Your lender might not be ready

Some lenders are accepting PPP application forms. Some, like Chase and PNC, are not. Your lender might be working to incorporate the SBA’s newest guidelines into the application process.

If your lender isn’t ready to accept your application, you might want to hold off on filling one out. That way, you (like your lender) can follow the most current SBA and Treasury guidance to give your application the best shot of forgiveness.

Not to mention, many banks aren’t accepting paper forms. Instead, they’re only accepting digital applications through an online portal.

Check with your lender to find out if they’re ready to accept PPP loan forgiveness applications. If

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